Blog
Nebraska Business Debt Relief Lawyers
Business Debt Relief Lawyers: A Helpful Guide for Struggling Business Owners
Starting and running a small business is extremely challenging. Many entrepreneurs take on significant business debt through loans, lines of credit, and credit cards in order to get their companies off the ground. While this can be an effective strategy initially, unforeseen circumstances like economic downturns, lawsuits, or changes in the regulatory environment can leave business owners struggling under the weight of overwhelming commercial debt.If you find yourself in this situation as a business owner, know that you have options. Working with an experienced business debt relief attorney can help you negotiate settlements with creditors, defend against aggressive collection practices, and explore strategies like debt consolidation or bankruptcy to regain your financial footing. This guide will provide an overview of commercial debt relief and how a lawyer can assist.
What Qualifies as Business Debt?
When people refer to “business debt,” they are talking about debt obligations taken on by a business entity itself. Some examples include:
- Loans or lines of credit taken out on behalf of the business
- Inventory, equipment, or supplies purchased for operating the business
- Commercial real estate like office buildings or retail space
- Business credit cards used for things like travel, marketing, or supplies
However, not all debt acquired by a business owner automatically counts as business debt. If you use a company card or account to purchase something for personal use – like a family vacation or home furnishings – that portion would be considered personal debt. The key factor is what the money was used for, not necessarily who will pay it back.Properly differentiating personal versus business debt is important, because the laws treat them differently. For example, consumer protection laws like the Fair Debt Collection Practices Act (FDCPA) only apply to personal debts.
Who is Responsible for Repaying Business Debts?
When a business takes on debt, who actually owes that money back depends on the type of legal entity involved:
- Sole proprietorships and partnerships: The business owner(s) can be held personally responsible for repayment, even if the debt was solely for business purposes.
- Corporations and LLCs: These entities help shield owners from personal liability. So if debt was properly maintained by the corporation or LLC (and not personally guaranteed), only the business itself is liable.
- Personal guarantees: When a business owner personally guarantees a business loan or credit account, they become individually responsible for repaying the debt if the business defaults, regardless of entity type.
As you can see, personal liability often hinges on whether you separately guaranteed repayment as an individual. An attorney can help you carefully review relevant documents to clarify who owes what. Getting this right is crucial to properly defending against creditor claims.
The Benefits of Working with a Business Debt Relief Lawyer
Trying to negotiate complex commercial debts on your own can be extremely difficult, especially when creditors aggressively pursue collection. The advantages of working with an attorney include:
- Better deals: Attorneys have far more leverage negotiating with creditors. Their legal expertise allows them to secure much lower settlement amounts compared to what you could likely achieve on your own.
- Stop harassment: Once a creditor is notified you have retained counsel, they are legally required to direct all further communication through your attorney rather than harassing you directly.
- Avoid litigation: Skilled lawyers know how to craft persuasive arguments to keep creditors from pursuing litigation over unpaid debts. They can often reach settlements that preclude the need for court.
- Protect assets: Aggressive creditors may try to seize business assets or your personal bank accounts. An attorney can put legal roadblocks in place to prevent account levies or other collection activities.
- Explore options: From debt consolidation to bankruptcy, an experienced lawyer will discuss multiple strategies and help determine what makes the most financial sense for your situation.
The bottom line is that a knowledgeable business debt relief attorney levels the playing field by bringing legal expertise to the situation. This makes negotiating with creditors far less intimidating.
What is the Debt Settlement Process?
If you hire an attorney to assist with debt relief, what exactly can you expect to happen? The basic debt settlement process goes like this:
- The lawyer thoroughly reviews your debts, assets, income, expenses and other key financial factors. This helps them understand the full scope of your situation.
- Based on this review, the attorney advises you on the best negotiation strategies and settlement targets for each debt. They handle all communication with creditors moving forward.
- Your lawyer first attempts to negotiate lump-sum settlements – where you pay a smaller percentage of what you owe in exchange for the creditor wiping out the remaining balance.